Since coming to market, the shares have gained 33%, but this has been a rocky ride. After reaching a peak of 278p in 2013, the shares fell 85% to just 40p at the beginning of 2016 on weak trading.  Since hitting this low, they have bounced, rising 234% year-to-date as the firm’s outlook has improved. 

Tremendous opportunity 

Bango enables payments for apps and games including Pokemon Go, and earlier this year, the company announced a new payment method for customers of global online retail giant Amazon. Under the terms of the deal, Japanese Amazon customers can pay for physical goods from Amazon.jp by adding the cost of the goods to their mobile phone bill. With the Japanse e-commerce market worth an estimated $100bn a year, this is a tremendous opportunity for the group. 

According to today’s interim results release from the company, these growth initiatives are starting to pay off. 

For the first half, End User Spend jumped 100% to £92.3m, with annualised EUS now over £400m, up more than 140% year-on-year. Off the back of this rising transaction volume, revenue increased 114% to £1.7m and losses before interest, tax, depreciation and amortisation improved slightly from £1.6m to £1m. Cash at the end of the period was £5.6m, which according to management is “sufficient to fund the group through profitability.”

High risk, high reward 

Looking at today’s results, it’s clear that Bango is heading in the right direction, and the company has a tremendous opportunity ahead of it. Nonetheless, Bango is still lossmaking and has a lot to do before its market value of £150m is justifiable.

Put simply, to me it looks as if Bango is a blue-sky company, and while the company may turn out to be the next tech unicorn, the shares remain a high-risk, high-reward investment. 

That’s why I’d ditch the company in favour of Vodafone (LSE: VOD) one of the FTSE 100’s most reliable income plays. 

Out of favour

Vodafone has fallen out of favour with investors over the past year lagging the FTSE 100 by 12% excluding dividends since mid-September last year. 

It seems as if the market is concerned about the telecoms group’s growth potential. Results for the year to March showed a loss of €6.1bn due mainly to a €3.7bn writedown in the value of the Indian business. Overall revenue decreased 4.4% €47.6bn due partly to foreign exchange movements. Organic service revenue expanded 1.9% over the course of the year. 

These figures show that despite the writedowns, Vodafone is making progress. And management is extremely confident about the group’s outlook. Adjusted earnings before interest, taxation, depreciation and amortisation are expected to expand between 4% and 8% for fiscal 2018, compared to 3.4% for 2017. Free cash flow is projected to hit €5bn up from €4.1bn. 

Free cash flow growth should underpin the firm’s dividend payout. City analysts believe Vodafone will pay a dividend of 13.1p per share to investors for the year ending 31 March 2017, giving a highly attractive dividend yield of 6.3%. On a cash basis, this payout is set to cost the company approximately €4.1bn, easily covered by management’s free cash flow target of €5bn for the year. 

The post Why I’d ditch this super growth stock to buy Vodafone Group plc appeared first on The Twelfth Magpie.

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Rupert Hargreaves does not own shares in any stock mentioned. The Motley Fool UK owns shares of and has recommended Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Bango (LSE: BGO) might have a memorable name, but its share price performance over the past few years is something I’m sure many would like to forget. From a peak of 299p in March 2013, Bango shares have crashed by 69% to today’s 88.5p, and that includes a 5% fall on the day the firm released first-half results.

Mobile payments companies can be very profitable, but the problem at Bango seems to be that it’s not making any profit yet while some of its competitors are, and that will surely raise fears that it’s not going to end up as one of the winners in the race.

Today’s news was a bit mixed. In the first half of the year, end user spend was up 150% on the same period last year, to £46.17m, and a 39% rise in gross profit took that to £0.85m. Cash is perhaps a bit tight at £7.24m, and investors might be concerned to see it having fallen from £12.13m at 31 December 2015 — though the company seems happy that there’s enough to keep it going until it achieves profitability.

But broker Peel Hunt has apparently downgraded its stance on Bango and has a £1 price target on the shares. I think that might be a little harsh. After all, Bango handles payments for mobile apps including Pokemon Go, and that didn’t launch until after the reported period. With a market cap of £57m, Bango could be a small-cap with a big future.

A sweeter future?

With a market cap of around £530m, PureCircle (LSE: PURE) is a bigger company, but its share price performance has also been unimpressive — it’s down 50% in just over two years, to 310p, after a 6% drop today following the release of full-year results.

The maker of stevia products reported a 9% rise in sales to $138.6m, with operating profit up 90% to $32.4m. Earnings per share more than trebled to 8.49 cents, though net debt rose in the period to $52.9m. So why the share price fall?

Sales in the second half were lower than expected, due to delays in some launches and to actions by US Customs and Border Protection (who detained a number of shipments based on, apparently inaccurate, suspicions of the use of forced labour). With recent regulatory approvals for stevia products coming from India and Brazil, barriers to sales appear to be falling — and chief executive Magomet Malsagov reckons that: “Prospects for the business over the next 4 to 5 years are strong, and we are confident that as our sales continue to increase, we will report improved profitability.”

PureCircle is forecast to record a further 165% rise in EPS in the year to June 2017, and with markets for natural calorie-free sweeteners potentially huge in these increasingly obese days, a forward P/E of 19 (and a PEG of just 0.1) looks cheap to me. There’ll be volatility ahead for sure, but I can see PureCircle turning into a nice little investment.

The post Why are these small-cap shares plunging today? appeared first on The Twelfth Magpie.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Bango has paid £2.4m in cash and shares to acquire BilltoMobile, a US service that provides carrier billing similar to that offered by Bango. BilltoMobile has relationships with all four of the major US mobile network operators, and processed £55m of annual billing last year.

Carrier billing means that customers can make purchases online and have them charged to their mobile bill. Bango believes this is an area with a lot of growth potential. The only problem is that neither Bango nor BilltoMobile actually makes any money at the moment. Bango reported a post-tax loss of £4.8m on turnover of £3.2m last year; BilltoMobile made a loss of £590,000 last year.

Operating costs should stay flat

Bango says that it can handle all of BilltoMobile’s current billing through its existing infrastructure, so operating costs should stay flat despite the firm handling a higher level of processing. Bango expects BilltoMobile to make “a significant contribution” to Bango’s performance, but stopped short of saying that the deal would enable Bango to make a profit.

On that basis, it’s fair to assume that Bango will remain lossmaking for the foreseeable future. Indeed, despite Bango’s optimistic projections for billing growth, the firm’s own house broker expects a loss of £5.3m for 2016 and £4.1m in 2017.

The figures may improve slightly following this acquisition, but I’m not sure this will be enough. Bango’s net cash balance was £12.1m at the end of last year. Today’s acquisition takes it down below £10m. Cash outflows for the last two years have been about £4.2m per year. If this performance continues, Bango could be out of cash by the end of 2017.

In my view, today’s gains are more of a selling opportunity than a ‘buy’ signal.

The market trusts this dividend

In contrast to struggling Bango, mobile giant Vodafone Group (LSE: VOD) is profitable and is expected to report rising profits this year.

Indeed, City analysts recently increased their earnings forecasts for Vodafone for the first time in almost a year. Vodafone’s Project Spring investment programme is now coming to an end, and there are early signs of recovery in some of the group’s major European markets.

Vodafone has kept investors happy by holding its dividend at 11.3p over the last couple of years, despite not being able to cover the payout with earnings. It now looks like the combined effect of falling spending and rising sales could provide a big boost to its profits over the next couple of years.

What’s interesting is that the market hasn’t really questioned this approach. Vodafone shares currently yield 5.2% and trade on a 2016/17 forecast P/E of 38. In my view these figures suggest that the firm’s biggest investors are confident that profits will rebound strongly before Vodafone is forced to cut its dividend payout.

As a Vodafone shareholder myself, I hope that’s correct. In all honesty I’m not certain, but I’m willing to trust the group’s ability to make steady progress and continue to enjoy the dividend yield until something concrete changes.

The post Are Vodafone Group plc and Bango plc poised to deliver big gains for investors? appeared first on The Twelfth Magpie.

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Roland Head owns shares of Vodafone Group. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Clearly, this is a time of major change for Lonmin as it seeks to implement an updated strategy in response to exceptionally difficult trading conditions. As part of this, it is restructuring its business and also seeking to cut costs; both of which are likely to have a positive impact on Lonmin’s bottom line over the medium to long term. And with Lonmin having the capital through which to effect its new plan following last year’s fundraising, its future seems to be brighter than it was just a handful of months ago.

This increased confidence plus a more stable commodity price environment has led to a rise in Lonmin’s share price of 99% since the turn of the year. This rapid increase could continue, although Lonmin remains a relatively high risk play and may only be of interest to less risk averse investors.

Also rising today are shares in Oxford BioMedica (LSE: OXB), with them being up over 11% despite no significant news flow having been released by the company today. In fact, the gene therapy specialist has not released an update since 7 March when it announced a new and expanded collaboration with Immune Design Corp. Since then its shares have fallen by around 6% but looking ahead, the company has clear potential to deliver profitability.

The challenge for investors, though, is that profitability may still be a long way off. And in the meantime Oxford BioMedica is in a cash burn phase which could require further fundraisings following its £8.1m placing in February. As such, and while Oxford BioMedica has a bright long term future in a very appealing space, it may only be worth a closer look for less risk averse investors.

Meanwhile, shares in mobile payments company Bango (LSE: BGO) have risen by 12% today despite a lack of news flow. Despite this, its shares have still fallen by 60% since the turn of the year even though Bango’s full-year results have showed that it is making progress. For example, it experienced significant growth in end user spend, with the company also doubling the rate of spending through the Bango payment platform. And with a stable cost base, it seems to be well-positioned to move towards profitability.

Of course, the market seems to be somewhat downbeat on Bango’s prospects judging by its recent share price fall. While today’s upward movement could indicate a change in sentiment, it may be prudent to await confirmation of this over the medium term before piling in.

The post Why Are Lonmin Plc, Oxford BioMedica plc & Bango plc Among Today’s Biggest Gainers? appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

However, with Bango experiencing faster than expected growth in developing markets, its end user spend margin was lower at 1.8%. The company expects further growth in end user spend during 2016 from its newer markets, where smartphone adoption is still increasing. And with its switch to recurring fees from upfront platform fees likely to have a positive impact on end user spend, it appears to be relatively well-positioned to continue its growth.

With Bango having a low fixed cost base, it has the capacity to process in excess of 10 times the current end user spend. It believes that it has a clear path to profitability and while it could prove to be a strong long-term performer, it looks set to remain highly volatile and risky during an uncertain period for the wider market.

Giant leap

Meanwhile, software specialist Fusionex (LSE: FXI) is also down by 16% today despite releasing results that are ahead of expectations. For example, revenue leapt by 35% versus the prior year, while net profit jumped by 28% versus the prior period. A key reason for such strong growth is the expansion of its partner network, with over 30% of its revenue coming from this space. And with Fusionex also reporting better than expected performance from its flagship big data product GIANT, as well as further investment in the product, it remains highly confident in its long-term future.

With Fusionex expected to grow its bottom line by 11% in the current year, it continues to offer upbeat near-term prospects. However, when the company’s valuation is taken into account, it appears as though its growth potential is already factored into its share price. For example, Fusionex trades on a price-to-earnings growth (PEG) ratio of 3.7, which indicates that it lacks appeal at the present time.

Improving operations

Also reporting today is software and hardware provider Servelec (LSE: SERV). It finished 2015 with a strong order book, improving pipeline and increased cash position versus the prior year, with its performance being relatively resilient despite challenges in the oil and gas markets. In fact, its health and social care division helped to offset softer performance from its automation unit, which experienced a slower than expected increase in sales for the year.

Looking ahead, Servelec expects the delayed projects in the oil and gas space from 2015 to boost its automation division’s performance this year, while its health and social care unit continues to offer a robust outlook. This is set to lead to a rise in earnings of 11% in the current year and with Servelec trading on a PEG ratio of just 1.5, it appears to be a relatively appealing buy for the long term.

Clearly, its shares are likely to be volatile due to the company’s exposure to the oil and gas industry. But for long term, less risk-averse investors Servelec could hold significant appeal.

The post 3 Small-Cap Tech Stocks To Beat The Market Crash? Bango plc, Fusionex International PLC And Servelec Group PLC appeared first on The Twelfth Magpie.

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Investors in both companies believe they have the potential to deliver big long-term rewards. But there are concerns. In today’s article I’ll ask whether the price is right to buy Watchstone and Bango.

Bango

Bango stock rose by as much as 13% this morning after the group said that its deal with Microsoft has been extended to include Windows 10. The change means that customers buying software apps and content from the Windows Store on Windows 10 devices can now charge the cost to their mobile phone bill.

Today’s update didn’t include any information about Bango’s recent trading performance. The group recently raised £11m cash through a placing of new shares, but I’m afraid the outlook isn’t that bright.

Bango’s latest interim results, which cover the first half of 2015, focus on a metric called End User Spend (EUS). This is the amount of money customers using the firm’s billing services spend.

The problem for investors is that EUS isn’t necessarily a good indicator of Bango’s growth. EUS rose by 72% to £18.45m during the first half of 2015. However, Bango’s revenue, once pass-through payments to digital merchants are stripped out, fell from £1.4m to £1.1m.

Gross profit fell from £0.7m to £0.6m and Bango reported an operating loss of £2.8m for the first half of 2015. Even if EUS continues to rise, I find it difficult to see how this business is going to gain sufficient scale to generate a worthwhile profit.

In the meantime, Bango shares trade on a price/sales ratio of about 30. That seems much too high to me, given Bango’s falling sales and mounting losses.

Watchstone Group

After selling its legal services business, Quindell’s new management renamed the group Watchstone.

The group recently completed a cash return of 90p per share. According to the latest management update, this leaves Watchstone with about £90m of cash. The group also has £55m of cash in escrow accounts and may be entitled to a further £39.6m of conditional payments relating to the legal services sale.

As I write, Watchstone’s market capitalisation is £146m. Stripping out £90m of available cash values the firm’s continuing operations at £56m. Is this an attractive valuation? Let’s see.

Watchstone’s continuing operations generated revenues of £35.3m during the first half of last year, down by 16% from £42m for the same period in 2014. Gross profit fell by 38% from £16.6m to £10.3m during the same period, and Watchstone reported an operating loss of £35m for the first half of 2015.

In my view, Watchstone’s operations only look cheap if the firm can reverse its sales decline and turn a profit. Forecasts from Watchstone’s house broker suggest this is unlikely in 2016. Although full-year revenue is expected to rise from £68.7m in 2015 to £75m in 2016, a loss of 68.5p per share is expected for 2016.

Watchstone’s new chief executive, Indro Mukerjee, is expected to issue a strategy update early this year. I would be tempted to wait until then before considering an investment.

The post Are Watchstone Group PLC And Bango plc Priced To Buy? appeared first on The Twelfth Magpie.

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Roland Head has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

The gains are welcome news for shareholders, but do today’s updates make either firm a buy?

Amur Minerals

Amur said today that it has now received £3m cash from a July 2013 equity swap agreement with Lanstead Capital, in addition to the £5m received in the original placing. This takes the total cash received from this deal to £8m, which is 60% more than the firm originally expected.

The reason this deal has been so profitable is that Amur’s share price has rocketed higher in 2015. The stock is up 45% this year, despite recent falls.

Amur’s goal in entering into an equity swap agreement with Lanstead in 2013 was to allow it to profit if its shares went up. To achieve this, Amur took a calculated risk and returned £4m of the £5m it raised in the placing to Lanstead.

Since then, Lanstead has been repaying this money to Amur in monthly instalments, one of which remains. These payments aren’t fixed, however. When Amur’s share price is above the agreed benchmark of 9.67p, Lanstead pays more to Amur, to reflect the increased value of its shares.

Similarly, Lanstead pays less when the shares are below 9.67p, as they were in 2014.

Amur received just $450,000 from Lanstead in 2014 and the firm’s cash reserves were down to $1.4m at the end of last year. Amur’s success in gaining a production licence came in the nick of time, but has left the firm quite well funded to begin the pre-production development phase.

Further fundraising will be required at some point, but things are much better than they might have been. Amur shares are a speculative hold, in my view.

Bango

Mobile payment specialist Bango said today that Telekom South African will use the Bango platform to allow Google Play to bill customers directly through their phone bills.

This is known as carrier billing and means that smartphone users wanting to buy apps and digital content like music don’t need to provide payment card details.

Bango says that carrier billing “routinely sees increases in digital content sales of 300 – 400%”. If today’s deal forms the spearhead of a major move into the African market, then it could be good news.

However, I think that Bango shareholders need to keep this deal in perspective. Their firm’s annual sales have fallen from £26.1m in 2009 to just £5.1m in 2014. Annual losses have increased steadily from -£0.7m in 2010 to -£5.15m in 2014.

Although some of these losses have been the result of the investment needed to develop the carrier billing platform, investors need to ask when the firm will break even.

The firm expects annualised transaction volumes to reach £65m by the end of 2015. They haven’t said whether they expect this to be enough to break even. This suggests to me that it won’t be.

Bango raised £6.0m through a placing in October 2014, but burned through £4.2m of cash in 2014.

I suspect more cash may be required, but I’ll reserve judgement until the firm’s interim results are published on 15 September.

The post Why Are Amur Minerals Corporation & Bango plc Rising Today? appeared first on The Twelfth Magpie.

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Roland Head has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.